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Hays Daily News — Realities of housing finance in rural America

September 26, 2016

Sod. Boxcars. Stone. Wood. Canvas. Kansans had used all of these materials in the construction of their homes before we were even recognized as a territory. As the pioneers of our great state learned, shelter from the temperamental Kansas weather patterns was a primary need for survival.

That need for housing is just as great today as rural America fights for its own survival. My travels around Kansas date back to my time as the congressman for the Big First district. At that time, the district was a collection of 69 largely rural counties dominated by fields of grain, pastures of cattle, and oil and gas wells. My conversations with community leaders as their congressman are no different than they are now as their senator. How do we make certain the next generation has the opportunity to continue to enjoy the special way of life we have cultivated in rural Kansas?

The most common answer to that question often centers on the availability of housing. One of the most consistent concerns expressed to me by city councils, county commissioners and local economic development directors is the lack of available housing stock, which hampers these local leaders’ ability to recruit job creators to their communities.

Once this need has been identified, however, the difficult task of finding solutions begins. Federal programs such as the Low Income Housing Tax Credit and the HOME Investment Partnerships Program are useful tools for developers and local governments who augment these resources with additional credit from banks and credit unions when available. For example, Ulysses has begun construction on a number of workforce housing units using a blend of financial tools that include federal components. However, it is clear the need far outstrips the availability of these programs. So why isn’t private investment jumping at this opportunity to fill a necessary void?

As a member of the Senate Committee on Banking, Housing and Urban Affairs, I work to make certain rural interests are represented. In past hearings on housing finance issues, I have questioned large developers about the relative lack of attention paid to rural housing projects. The typical response I receive is as obvious as it is frustrating. I am told there is little incentive, from a business standpoint, to make the investment in rural America due to the economies of scale. Simply put, the costs associated with rural construction cannot be offset due to the relatively low number of units needed compared to larger population centers.

So how do we empower local builders to partner with their communities to fill this need? The answer to this question is largely tied to the cost and availability of local credit. New regulations put in place following passage of the Dodd-Frank legislation disproportionately affect our community banks and credit unions. Our local lenders are increasingly being squeezed out of their own housing economies because the cost of complying with these new rules, coupled with the fear of the consequences if they were to make an honest mistake, prevents them from serving their communities as they always have done. When the Senate Banking Committee was exploring changes to the secondary mortgage market, I sought the feedback of numerous Kansas lenders. I was surprised to frequently hear the response, “Oh senator, we don’t do home loans anymore.” To hear that local lenders are no longer in the business of financing the purchase of a home because of how they are treated by their government is terribly damaging.

While my Senate colleagues and I have introduced a number of bills to relieve this burden, it is clear to me one piece of legislation authored, debated, passed and signed into law is not going to provide the comprehensive solution to the growing rural housing problem. Rather, it will take a mixture of legislation, appropriate regulatory changes, and perhaps most importantly, a growing economy to solve this issue.

But just as those early Kansas sodbusters refused to give up on their dreams of making a life for themselves, so too will I remain steadfast in my work in the United States Senate so all who care to share in that special way of life we live in Kansas can do so for years to come.